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David Fickling

Rio Tinto's Coal Brush-Off

Pit sales belie the ardent words of the mining company's management.

Rio Tinto and coal used to have such a bright future together.

Back in 2008, the Anglo-Australian miner's 13 pits produced about 153 million metric tons of thermal coal, the lower-quality stuff burned by power stations. Its energy division, which also includes a couple of uranium mines, accounted for $2.6 billion of net income, about 22 percent of the group total. 

The energy unit has since sold or shuttered eight coal pits, and still managed to rack up a $210 million net loss last year. Private-equity firm X2 Resources is in talks about buying three of the five mines that remain, people familiar with the matter told Bloomberg's Brett Foley, Dinesh Nair and Thomas Biesheuvel last month. If those sales go ahead, a company that was formerly one of the world's biggest thermal coal producers will be reduced to shipping out a few hundred thousand tons a year as a by-product from two mines that mainly produce coking coal, a more profitable variety used in steelmaking.